Matching
Select the best answer
from the vocabulary word bank.
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a. | Money Market | f. | Sinking Fund | b. | 3-6 | g. | Priority | c. | $500-$1000 | h. | Negative | d. | First | i. | Murphy’s Law | e. | Rate of
Return |
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1.
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Place your emergency fund in this type of
account.
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2.
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Baby Step 1 is _________________.
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3.
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The typical American has a ______ savings
rate.
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4.
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Saving must become a _______.
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5.
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A fully funded emergency fund is ________ months
of expenses.
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6.
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Pay yourself __________.
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7.
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Use the ___________ approach instead of borrowing
to purchase things.
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8.
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The percentage by which your money grows is called
the ______.
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9.
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__________ says that whatever can go wrong will go
wrong.
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Multiple Choice
Identify the
choice that best completes the statement or answers the question.
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10.
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The saving habits of Ben and Arthur best illustrate
which principle of saving?
a. | Rate of return matters. | c. | The length of time money is invested matters. | b. | The amount of the initial investment is the key. | d. | Both a and
c. |
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11.
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What is the most sensible way to buy a $4,000
car?
a. | Put a down payment of $500 and use 90 days same-as-cash
to pay the balance. | c. | Shop around for the best interest rate
before taking out a $4,000 loan. | b. | Use the sinking
fund approach and save $400 a month for ten months. | d. | Ask your parents
to co-sign a loan at your local credit union. |
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12.
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Which is not a key to saving money?
a. | Your income | c. | Discipline | b. | Making savings a
habit and priority | d. | Focus |
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13.
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What of the following is not a reason to
save?
a. | Emergency fund | c. | Pay
off debt | b. | Purchases | d. | Wealth
building |
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14.
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How much money should Lisa and Joe have in their
emergency fund if they have a $3,000 credit card bill and mortgage?
a. | 3-6 months of expenses | c. | $1,000 | b. | 10% of their
credit card balance | d. | No emergency fund until the credit card is paid
off |
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15.
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Even though a savings account is fine when you are
just beginning to save, why is a money market a better place to keep your emergency
fund?
a. | A savings account is a bit too easy to
access. | c. | A money market is accessible and generally has check
writing privileges if needed. | b. | Typically, money
markets average a higher interest rate than a savings account. | d. | All of the
above. |
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16.
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A good way to build discipline and get into the
habit of saving is:
a. | Pre-authorized checking | c. | Always pack a lunch and save the cost of eating out | b. | Avoid daily expenses such as coffee | d. | Have your parents
remind you |
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17.
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The Baby Steps can best be described
as:
a. | A systematic process for getting out of a financial
mess | c. | A series of steps that will work in good times and in
bad times | b. | A series of seven sequential steps that help you plan,
save and manage money | d. | All of the above |
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18.
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For most people, (excluding students) a fully
funded emergency fund will be about:
a. | $1,000 | c. | $5,000-$10,000 | b. | $3,000-$5,000 | d. | $10,000-$15,000 |
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19.
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Savings is about:
a. | Making more money and discipline | c. | Emotion and contentment | b. | Pride and
greed | d. | Contentment and earning more money |
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20.
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For which of the following should you
save?
a. | Wealth building | c. | Purchases | b. | Emergency
fund | d. | All of the above |
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21.
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Which of the following is true about the concept of
saving?
a. | Saving must become a priority after all bills are
paid. | c. | You must pay yourself first. | b. | You will save when you make more money. | d. | All of the
above |
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22.
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A sinking fund approach means:
a. | Saving and paying cash | c. | Buying with credit, getting a low interest rate, and sinking further into
debt | b. | Buying with credit, but paying it off in full before the
interest comes due | d. | 90 days
same-as-cash |
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23.
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Which statement is most true about a one-time
investment for 40 years?
a. | The interest rate doesn’t matter as long as you
leave it alone for 40 years. | c. | The annual interest rate does matter
when making a one-time investment. | b. | It is foolish to
only make a one-time investment. | d. | All of the above |
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24.
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Which statement is true?
a. | People spend more money when they pay with
cash. | c. | When you pay with cash, it is hard to negotiate a deal
because you didn’t use their credit. | b. | When you pay with
cash, you can almost always negotiate a better deal. | d. | Using a credit
card is safer than carrying cash around. |
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25.
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Using the sinking fund approach, how much do you
have to save to buy a $5,000 car next year?
a. | $275 a month into savings | c. | $400 a month into savings | b. | $300 a month into savings | d. | $416.66 a month
into savings |
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26.
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How much money should you have in your emergency
fund if you are working on Baby Step 2 (pay off all debt)?
a. | 15% of your household income | c. | $500-$1,000, depending on your current income | b. | 3-6 months of expenses | d. | You should not
have an emergency fund until all debt is paid |
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